Your Down Payment

Many people who are looking to purchase a new house qualify for a mortgage loan, but they don't have much to put up the standard down payment. Here's where you start

Slash the budget and build up savings. Be on the look-out for ways you can trim your monthly expenses to save toward a down payment. You could also decide to enroll in an automatic savings plan to have a percentage of your payroll automatically moved into your savings account. Some effective ways to save additional funds include moving into less expensive housing, and skipping a year's vacation.

Sell things you do not really need and find a part-time job. Try to find an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. In addition, you can put together an exhaustive inventory of items you can sell. Unused gold jewelry can be sold at local jewelry stores. A closetful of small things may add up to a fair amount at a garage or tag sale. You could also research what your investments could sell for.

Borrow money from your retirement plan. Investigate the parameters of your particular program. Many people get down payment money from withdrawing from Individual Retirement Accounts or borrowing from 401(k) plans. You will need to make sure you are clear about any penalties, the effect this will have on your income taxes, and repayment terms.

Ask for a generous gift from your family. Many homebuyers somtimes get help with their down payment help from giving family members who may be eager to help get them in their first home. Your family members may be pleased at the chance to help you reach the goal of buying your first home.

Research housing finance agencies. Special mortgage programs are offered to homebuyers in specific situations, like low income buyers or people looking to renovating houses in a particular neighborhood, among others. With the help of a housing finance agency, you may receive an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies may assist you with a lower interest rate, help with your down payment, and offer other assistance. These non-profit programs exist to boost home ownership in specific areas.

Find out about low-down and no-down mortgage loan programs.

  • FHA mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income buyers get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, enabling homebuyers who will not qualify for a traditional mortgage loan, to get financing. Interest rates for an FHA loan normally feature the market interest rate, while the down payment amounts for an FHA loan will be less than those of conventional loans. Closing costs might be included in the mortgage, and the down payment could be as low as 3 percent of the total amount.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan does not require a down payment, has limited closing costs, and offers a competitive rate of interest. While the loans don't originate from the VA, the office certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You can fund your down payment through a second mortgage that closes at the same time as the first. In most cases the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. Instead of the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In the case of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a slightly higher interest rate with the loan from the seller.

The satisfaction will be the same, no matter which approach you use to pull together your down payment. Your brand new home will be worth it!

Want to discuss the best options for down payments? Give us a call: 407-834-3377.

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